Head to Head Survey: Varian Medical Systems (VAR) vs. Medtronic (NYSE:MDT)

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Medtronic (NYSE:MDT) and Varian Medical Systems (NYSE:VAR) are both large-cap medical companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.

Valuation & Earnings

This table compares Medtronic and Varian Medical Systems’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Medtronic $29.95 billion 4.25 $3.10 billion $4.77 19.78
Varian Medical Systems $2.92 billion 3.74 $149.90 million $4.42 27.01

Medtronic has higher revenue and earnings than Varian Medical Systems. Medtronic is trading at a lower price-to-earnings ratio than Varian Medical Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Medtronic and Varian Medical Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medtronic 0 7 12 1 2.70
Varian Medical Systems 3 3 2 0 1.88

Medtronic currently has a consensus price target of $102.45, indicating a potential upside of 8.57%. Varian Medical Systems has a consensus price target of $116.00, indicating a potential downside of 2.82%. Given Medtronic’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Medtronic is more favorable than Varian Medical Systems.

Dividends

Medtronic pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Varian Medical Systems does not pay a dividend. Medtronic pays out 41.9% of its earnings in the form of a dividend. Medtronic has increased its dividend for 40 consecutive years.

Insider and Institutional Ownership

80.0% of Medtronic shares are held by institutional investors. Comparatively, 92.7% of Varian Medical Systems shares are held by institutional investors. 0.3% of Medtronic shares are held by company insiders. Comparatively, 0.8% of Varian Medical Systems shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Medtronic and Varian Medical Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medtronic 10.56% 12.98% 7.10%
Varian Medical Systems 5.14% 27.54% 12.55%

Risk & Volatility

Medtronic has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Varian Medical Systems has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500.

Summary

Medtronic beats Varian Medical Systems on 12 of the 18 factors compared between the two stocks.

Medtronic Company Profile

Medtronic plc develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group. The Cardiac and Vascular Group segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; AF ablation product; insertable cardiac monitor systems; mechanical circulatory support; TYRX products; and remote monitoring and patient-centered software. It also provides aortic valves; percutaneous coronary intervention stents, surgical valve replacement and repair products, endovascular stent grafts, percutaneous angioplasty balloons, and products to treat superficial venous diseases in the lower extremities. The Minimally Invasive Therapies Group segment offers surgical products, including surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, and gynecology products; hardware instruments and mesh fixation device; and gastrointestinal, inhalation therapy, and renal care solutions. The Restorative Therapies Group segment offers products for spinal surgeons, neurosurgeons, neurologists, pain management specialists, anesthesiologists, orthopedic surgeons, urologists, colorectal surgeons, urogynecologists, interventional radiologists, and ear, nose, and throat specialists; and systems that incorporate energy surgical instruments. It also provides image-guided surgery and intra-operative imaging systems; and therapies for vasculature in and around the brain. The Diabetes Group segment offers insulin pumps and consumables, continuous glucose monitoring systems, and therapy management software. The company was founded in 1949 and is headquartered in Dublin, Ireland.

Varian Medical Systems Company Profile

Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide. It operates through two segments, Oncology Systems and Varian Particle Therapy. The Oncology Systems segment provides hardware and software products for treating cancer with radiotherapy, fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy, and brachytherapy. Its products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, and accessories; and information management, treatment planning, image processing, clinical knowledge exchange, patient care management, decision-making support, and practice management software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, physicians' offices, oncology practices, radiotherapy centers, and cancer care clinics. The Varian Particle Therapy segment develops, designs, manufactures, sells, and services products and systems for delivering proton therapy for the treatment of cancer. Varian Medical Systems, Inc. has a strategic partnership with Siemens AG to co-develop new imaging and treatment solutions. The company was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. Varian Medical Systems, Inc. was founded in 1948 and is headquartered in Palo Alto, California.

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